INCOME TAX OFFICER Vs. KURUMBER BETTA ESTATE

JUDGEMENT

(1.) THE Revenue (the Fourth Income-tax Officer, Mysore Circle, Mysore, and two others) is the appellant in this writ appeal. THE respondent herein, a firm having its place of business at Ernakulam, is an assessee to income-tax. In the original petition, the prayer was to quash exhibit P-25, dated January 18, 1990, and exhibit P-29, dated March 12, 1990, communications addressed by the Revenue to the respondent-firm. THE said communications stated that the sum of Rs. 11,67,000 deposited by the assessee by a demand draft has been appropriated towards the arrears of income-tax/wealth-tax due from the late Sri S. Channaiah and the entire one-third share of the sale proceeds has been appropriated towards the arrears as per the instructions of the Central Board of Direct Taxes. In the original petition, there is also a prayer to direct respondents Nos. 2 and 3 to refund to the petitioner the sum of Rs. 11,67,000 with interest thereon from the date of deposit to the date of refund. Padmanabhan J., in a very detailed judgment dated November 19, 1991 (see Kurumber Betta Estate v. Fourth ITO [1992] 197 ITR 499 (Ker)), allowed the original petition with certain directions. Exhibits P-25 and P-29 were quashed. THE Revenue was directed to settle accounts in the light of the directions and observations contained in the judgment. In brief, the learned single judge held that, out of the total amount due to Channaiah from the sale consideration, the liabilities of the firm, as on the date of death of Channaiah, will have to be paid and the balance alone could be diverted and appropriated by the Revenue. Aggrieved by the aforesaid judgment of the learned single judge, the Revenue has come up in appeal.

(2.) WE heard counsel for the Revenue, Mr. N. R. K. Nair. Two-fold arguments were advanced before us. They are as follows :

(3.) AS could be seen from paragraph 13 of the judgment, the assessee as well as the Revenue agreed at the time of arguments that the liabilities of the firm as on the date of death of Channaiah will have to be paid and the balance alone could be divided and appropriated by the Department. In our opinion, the learned single judge was justified in holding that the Revenue is entitled to appropriate out of the amounts in deposit only the net amount due to Channaiah after deducting the expenses and liabilities discussed in the judgment. We are, therefore, of the view that the learned single judge was justified in quashing exhibits P-25 and P-29 and in directing the Revenue to settle the accounts in the light of the observations and directions contained in the judgment.